A brief outlook of the Greek telecom provider-OTE-

The Greek national telecom provider has come to the limelight the past few weeks, due to the proposed govermental initiative for privatization. That includes selling off some 25% of the corporation’s shares to a “Strategic investor”. The state currently holds 38.4% of the total capitalization and it will need a special parliamentary act in order to lower this percentage under 33%.

This telecom provider is one of the largest and most productive in the region between central Europe and down to Eastern Mediterranean. A short outlook follows and a presentation of its current operations.

Total revenues-2006-(Est.): 5,576 million Euro

EBITDA-2006-(Est.): 2,098 million Euro

Profit-2006-(Est.): 441 million Euro

Market capitalization(Current): 9,1 billion Euro

Sources: Credit Suisse First Boston

Ownership and stakes in other firms:

IN GREECE

1)67% of Cosmote(The largest mobile telecom provider with a 37% in the Greek market and with a market cap. of 6,3 billion Euro. The company has presence in Bulgaria, FYROM, Albania and in Romania.

2) 90% of OTEnet: The largest internet provider in Greece and the pioneer in broadband technologies with some 330,000 connections up to now rising to an estimated 800,000 by 2008.

3) 100% of Infote: The largest service corporation in Greece in the field of telecom databases.

4) 100% of OTEGlobe: An international firm well established in the field of telecom consulting and technological upgrading.

5) 100% of OTESat-Maritel: Provider of telecom services for satellite communications

6) 100% of OTEPlus: Telecom consulting entity

7) 50%? of Hellas-Sat Consurtium: The company operating the only Greek satellite(Hellas-Sat). It has a virtuall market penetration of around 300 million costumers in three continents(Europe, N. Africa, M. East)

8) 100% of OTE-Estate: The real estate corporation of the OTE conglomerate with an estimated realty value of 3 billion Euro.

9) 100% of OTE-Academy: The business educational arm of OTE that provides academic level courses for telecom curriculum aimed for managers and technology afiliated professionals in Greece and abroad.

10) 30% of Cosmoone: The largest B2B provider in South Eastern Europe. Additional 30% is owned by Cosmote.

11) OTE has also established an R&D telecom centre in Athens and regurarly collaborates with universities and institutes on developing new products and services.

12) OTE has the monopoly of the network of street phones in the Greel teritory. It has also established similar businesses in Jordan, Armenia and Yemen.

ABROAD

1) 25% of telecom Serbia: The national telecom provider of Serbia, with positive prospects for development.

2) 90% Telecom Armenia: The national telecom company of Armenia

3) 54,1% of telecom Romania: The national telecom provider of Romania, with imminent entrance in the stockmarket. It is assumed that its shares will have a significant growth due to the future dynamics of the Romanian economy.

4) 100% of GloBul(By Cosmote): Mobile provider in Bulgaria

5) 100% of Cosmofon(By Cosmote): Mobile provider of FYROM

6) 85% of AMC(By Cosmote): Mobile provider of Albania

7) 70% of CosmoRom(By Cosmote): Mobile provider of Romania

On overall OTE is a telecom provider with an existing costumer base of around 70 million people(The size of UK and Belgium combined) and most importantly in a region still lacking the proper telecom infastructure. That leaves room for immense expansion in the next generation along with the profits that this implies. Moreover the real estate assets of OTE have not been developed and there is the potential of creating the single largest real estate corporation in the Balkans should there is a suitable business plan. The proposed privatization of the largest company in Greece will heat up the current lukewarm political climate in the country and it would be of pivotal importance for the whole of the privatization strategy of the goverment. Moreover the proposed foreign strategic investor will benefit from the primacy of OTE in South Eastern Europe and one should expect a fierce antagonism between the competing parties. Up to now the Spanish Telephonica, the French Telecom, the British telecom and the Deutche telecom are considered to be the favorites. Nevertheless it is likely that a strategic move by either Japanese or American companies should not be excluded within the coming months.

Should the Greek goverment sell-off 27% of the company-under current market cap. and without further negotiations- it will raise capital over 1,3% of the country’s GDP. The most probable scenario though is to merge OTE with Cosmote in 2007, therefore the same stake would worth-with current prices always-around 4,4 billion Euro or 2,2% of the country’s GDP. This amount will be sufficient for the cover up of the deficient state balance and will-Along with the rest of the privatizations- enable the country to produce in the coming years; robust state economics without the threat of an EU economic surveillance.

Ioannis Michaletos, All Rights Reserved.

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